What is a Quotation?
How Does a Quotation Work?
For example, a quotation for Company XYZ
A level I quote is the real-time bid and ask price for a security that trades on the Nasdaq or over-the-counter markets. They do not disclose which market makers are bidding for or the security, whether there are limit orders on the security, or the size of potential trades at a particular price.
A level II quote is a set of real-time trading information for a security that trades on the Nasdaq or over-the-counter markets. It includes the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, the high price for the day, the low price for the day, and a ranked list of the real-time and ask prices from participating market makers.
A level III quote includes all of the above but also allows a market maker to change its bids, offers, and order sizes for securities in which it makes a , as well as execute orders, change , and send out trade confirmations.
Why Does a Quotation Matter?
Quotations are necessary to inform investors about the prices of securities. The information contained in a quotation is sometimes limited; for example, it may not disclose whichmakers are bidding for or the security, whether there are limit orders on the security, or the size of potential trades at a particular price. In other words, quotations do not give the viewer access to the "order book" showing who has an interest in a security and at what price. But quotations do give traders and investors a basic idea of how a security is doing.